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COAG Decision Regulation Impact Statement – COAG Energy Council

On 19 December 2018, the Council of Australian Governments (COAG) Energy Council agreed to implement the Retailer Reliability Obligation (RRO) for the National Electricity Market (NEM).

The RRO builds on existing spot and financial market arrangements in the electricity market to facilitate investment in dispatchable capacity. It is designed to incentivise retailers, on behalf of their customers, to support the reliability of the power system through their contracting and investment in resources. The RRO does this by requiring electricity retailers to demonstrate they have entered into sufficient contacts for dispatchable capacity (including demand response) to cover their share of system peak demand at the time of the gap between demand and supply. The obligation would be triggered if there is a material gap between forecast demand and supply three years out from the period in which the gap is forecast.

The Energy Security Board prepared the Decision Regulation Impact Statement (RIS) on behalf of the COAG Energy Council following consultation with stakeholders. The RIS was assessed as compliant with COAG RIS requirements by the Office of Best Practice Regulation.